Fiat chief executive Sergio Marchionne forecasts that the European car market will remain weak for the next two to three years, saying that he does not expect sales in the continent to recover during the period. Speaking during the sidelines during the launch of the Fiat 500L small minivan, Marchionne justified his decision to postpone the rollout of new Fiat models like the new Punto subcompact in Europe and to reduce investment in the region by EUR500 million ($630 million) this year.
According to Marchionne, launching the revamped Punto subcompact would result in a "failure" since the European auto market is still suffering from a price war and lower volumes. Fiat’s CEO said the current transaction prices for the new subcompact models mean that the company would not be able to recover its investments in a new Punto.
Marchionne said the company is being extremely cautious on investing if it cannot recover its investment. Car sales in Europe fell for the eighth consecutive months in May by 8.4 percent to 1.15 million units in May 2012, according to industry association ACEA. New-car sales in the continent are expected to drop 7 percent from 13.6 million units in 2011 to 12.6 million vehicles in 2012.